The Property Practitioners Act 22 of 2019 (the ‘Act’) came into operation on the 01^st of February 2022. It repeals and replaces the Estate Agency Affairs Act 112 of 1976.

Briefly stated, the aim of the Act is to:

• Regulate the role players in the real estate sector in South Africa which include Estate Agents, Managing Agents and Property Developers.
• Provide for the protection and promotion of the interests of consumers.
• Provide for the transformation of the property sector.

The act also established the Property Practitioners Regulatory Authority (the ‘Authority’) which aims at regulating the conduct of Property Practitioners and administrating the Act. 

The Act defines a Property Practitioner over 7 classes:

Class 1 – As per below diagram

Class 2 – Sells or Markets development properties

Class 3 – Property Management

Class 4 – A Trust which fits into a Class 1 Practitioner

Class 5 – Directors, Members, Trustees and Employees of Property Practitioners

Class 6 – Any person who is employed by or renders services to an Attorney which fits into a Class 1 Practitioner

Class 7 – Any person who at the time of being found guilty of sanctionable conduct was a Property Practitioner.

 Section 67 of the Act makes it mandatory for a Property Practitioner to procure a completed Disclosure Form (“Immovable Property Condition Report in relation to the Sale of any Immovable Property”), regarding the condition of the property, from the Seller or Lessor (Landlord), prior to the conclusion of a Sale or Lease Agreement.

Such Mandatory Disclosure Form must:

• Be shared with the Purchaser/Lessee (Tenant)
• Be signed by all relevant parties and
• Be attached to any sale or lease agreement

If such Disclosure Form was not completed, signed or attached to the Agreement, it must be interpreted as if no defects or deficiencies of the property were disclosed to the Purchaser/Tenant.

Failure by the Property Practitioner to comply with this requirement means that the affected consumers can hold the Property Practitioner liable for any losses they may sustain. Furthermore, the Authority may impose a fine on the Property Practitioner.

The content of the form is prescribed in the Regulations. Click here to download a copy of the Mandatory Disclosure Form.

The Act imposes an obligation on Property Practitioners to be in possession of a valid Fidelity Fund Certificate (‘FFC’). Property practitioners are required to apply to the Authority to obtain a Fidelity Fund Certificate. Once the required certificate is issued, it is valid for a period of three (3) years.

On request, a Property Practitioner must be capable of producing a valid FFC. The FFC must be prominently displayed at the Property Practitioners place of business, and the possession of same must be indicated on emails, letterheads, business cards and all marketing material.

Should a Property Practitioner not be in possession of a valid FFC, he/she will be guilty of an offense and will not be entitled to payment of any remuneration for the conclusion of a transaction. There is a transitional six (6) month period from the effective date (01 February 2022) after which all Property Practitioners must be fully compliant.

Section 54 imposes a duty on every Property Practitioner to keep a Trust Account and same must be reflected on their letterhead, together with the words “Registered with the Property Practitioners Regulatory Authority”. A Property Practitioner may, however, apply to the Authority for a formal exemption in terms of Regulation 2.

Property Practitioners are also now required to keep Financial Records, Agreements, Mandatory Disclosure Forms and Communique relevant to their property business for a period of five (5) years.

Every aspect of the Act cannot be addressed herein due to the extent of the detail set out in the Sections and Regulations of the Act. We have attempted to focus on the most important information regarding the Act, but this is by no means a complete reflection.

In conclusion, it is quite clear that Property Practitioners owe a duty of care to both Seller/Landlord and Purchaser/Tenant. Failure on behalf of a Property Practitioner to comply with the obligations placed on them by the Act may result in a fine or imprisonment. 

By Patricia Morgan | Director : Property Department